Sunday, June 20, 2021
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Circuit filters allow operators to play with public money

The stock exchanges have put several stocks like Rain Industries, Radico Khaitan, Graphite etc. under additional surveillance which sans any logic. The stock exchanges ‘sleep’ during extreme volatility when stocks go up multiple times and wake up from their slumber when stocks more than halves from their peaks. 100 per cent margin money on quality names and five per cent circuit filters is unwarranted. Price discovery is the mechanism of volatile markets and restrictions through circuit filters give operators a chance to manipulate stocks to trap investors further.

The stock should not have circuit filters unless warranted for specific reasons. Let investors discover the price which is possible if you allow trades. SEBI should act as a regulator and it is not a surveillance department which is the job of the investigating agencies like CBI and others. Investors should be careful investing in stocks that trade in circuits both ways as those are operator stocks which lack fundamentals. The stock exchanges are aware of these dubious companies but corruption rules roost and they are allowed to play with public money!

(The views expressed by the author in the article are his/her own.)

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